Legal Strategies to Reduce Thai Tax

[Ben Zioner]

35 minutes ago, Mike Teavee said:

You remitting 20Million to your Wife & nothing to yourself would put you at risk of being caught up in an Audit in both those categories. 

Doesn't have to be that extreme. Lets say a family of four needs 3 Million a year. Husband transfers 1.5 to support himself and his share of the kids and transfers 1.5 to the wife so that she supports herself and her share of the kids.

 

What will RD do?

 

a) Tax Husband on 3 Million,

b) Tax Husband on 1.5 M and Wife on 1.5 M,

c) Tax  Husband on 1.5 M and consider Wife's money as a gift.

 

I'd be happy with b) but I don't think RD will agree.

 

[JimGant]

37 minutes ago, Mike Lister said:

Condo's??? If somebody remits funs to Thailand to pay for a condo, the money is either assessible or it's not. If it is, the remittance itself is the taxable event...or are you saying/asking something completely different?

Yeah, a little convoluted. Point was, a loan for a condo, remitted to Thailand, is non assessable. A loan from a credit card company, to buy a hamburger, is also a non assessable loan. Unless, per HMRC (as you point out), you don't live in the UK, but you're a resident of the UK (obviously a legal distinction) -- and you choose to be taxed on the remittance basis. Then, a credit card purchase is treated the same as a debit card purchase -- thus, no loan factor:

 

Quote

the cardholder is effectively authorising the credit card company to pay the bill for the goods or service in just the same way as if they had instructed the bank to make a payment directly to the person supplying the goods or services.

As far as I can find, this non dom example for UK types is the only example that Thailand could follow for how to treat certain remittances. This, if memory serves, would also bring in LIFO for commingled funds. So, I guess we'll have to wait and see if Thailand wants to use an example of a 'resident who doesn't reside' as their best example to follow.

[Mike Teavee]

16 minutes ago, Ben Zioner said:

Doesn't have to be that extreme. Lets say a family of four needs 3 Million a year. Husband transfers 1.5 to support himself and his share of the kids and transfers 1.5 to the wife so that she supports herself and her share of the kids.

 

What will RD do?

 

a) Tax Husband on 3 Million,

b) Tax Husband on 1.5 M and Wife on 1.5 M,

c) Tax  Husband on 1.5 M and consider Wife's money as a gift.

 

I'd be happy with b) but I don't think RD will agree.

 

I believe Gifts under a "Moral Obligation" are valid so would say that C is technically correct and you could even argue that the Husband could gift his Wife 2Million to support herself & 100% of the costs of supporting the kids. 

 

But whether TRD would see it that way, especially if you were living together is anybody's guess.

 

 

Edit: Also think that by reporting an income of 1Million THB you're greatly reducing the risk of being audited. 

 

[Lorry]

9 hours ago, soi3eddie said:

 

For this reason, I always give to my GF and she uses her ID when changing money. Trouble is, she then knows what cash I have 🙂 

 

If it's too much she may bounce to pay taxes on this

[Lorry]

3 hours ago, Mike Lister said:

spending via the traditional methods of bank account and card spending.

Ahem.

Maybe I am too old, but for me the traditional method of spending is cash. 

Certainly not scanning whatever in some app. Neither a bank transfer or a card.

[Lorry]

2 hours ago, JimGant said:

Indeed. If I buy a BigMac, and charge it to my credit card, this is the bank's money paying for my lunch. Same as if I borrowed money from my bank to buy a condo in Thailand. The money actually being remitted into Thailand is certainly not income -- it's a loan, with how it's to be paid back stipulated in the contract -- whether we're talking hamburgers or condos. For my credit card, once a month my bank debits my checking account to pay off the credit card bill. Money moves from one side of my bank to the other. It's not a cash flow with any income aspects to the IRS -- and certainly no income aspect to Thailand. I don't see any grey area the somehow could make credit card charges some kind of remitted income...

Of course you are completely right.

But I doubt the RD will agree. 

[jerrymahoney]

I remember having this discussion in January and what I said was that, if you could make a Thai gift from a non-Thai source up to 20 million baht tax-free, it would be a sure-thing routine recommendation by the Tax CPA's to their high flyer clientele.

[Lorry]

1 hour ago, Banana7 said:

Pensions are not income from employment

In Thailand, they are. 

BTW in my home-country they are too, we don't get a pension if we haven't worked for it. 

[Lorry]

1 hour ago, Mike Teavee said:

I only use my CC for Airfares & overseas Hotels, Airfares arguably remittance, overseas hotels not).  

I will preferably buy tickets that are not paid into a Thai account. 

No TG, using TG would be a remittance. 

But if I use my home-country money to pay an airline in a third country,  I wouldn't call it a remittance to Thailand (HMRC does, however).

 

Generally,  just consume as little as possible in Thailand.  Everything that exceeds the basics is now 35% more expensive. If you spend less than TEDA (for many of us 400,000 a year) it would be best.

[Mike Lister]

23 minutes ago, Lorry said:

Ahem.

Maybe I am too old, but for me the traditional method of spending is cash. 

Certainly not scanning whatever in some app. Neither a bank transfer or a card.

Come on now!!! This is not the Dark Ages, people use bank accounts, debit cards, phone apps and wire transfers.

[Lorry]

You said "traditional"

In a typical country in Europe, used by everbody in daily life:

Cash for hundreds of years

Bank accounts and transfers for about half a century

Debit cards for much less than half a century

Phone apps are just now gaining popularity,  I know exactly one person in my home country using them

 

And in America?

They use cheques....

[jayboy]

16 hours ago, Mike Lister said:

There are no rules except one, the Gift must not be for the benefit of the gifter.

 

Do you think school fees would fall into this category and would it be prudent to remit directly to the school?

[statman78]

Most years I bring in less than my annual US Social Security benefit so I know Thailand will not tax that money.  On occasion I may bring in more but the money will come from my retirement savings.  That account is invested and is growing.  I have my statement that shows my balance as of December 31, 2023.  Am I correct in assuming that as long as the amount I bring in above my SS benefit is below my balance as of December 31, 2023 I will have no Thai tax liability?

[Mike Teavee]

55 minutes ago, Lorry said:

I will preferably buy tickets that are not paid into a Thai account. 

No TG, using TG would be a remittance. 

But if I use my home-country money to pay an airline in a third country,  I wouldn't call it a remittance to Thailand (HMRC does, however).

 

Generally,  just consume as little as possible in Thailand.  Everything that exceeds the basics is now 35% more expensive. If you spend less than TEDA (for many of us 400,000 a year) it would be best.

If the flight originates in Thailand then it's considered remitting money into Thailand so doesn't matter if you book Thai Airways, Emirates, KLM, Qantas etc... if the flights starts from a Thai Airport, you've brought money into Thailand to pay for it. 

 

However, if you booked a flight to a 3rd country & booked a different itinerary to then take you onwards to your home country, that flight wouldn't be remitted income even if it was on Thai Airways.

 

[Mike Teavee]

11 minutes ago, statman78 said:

Most years I bring in less than my annual US Social Security benefit so I know Thailand will not tax that money.  On occasion I may bring in more but the money will come from my retirement savings.  That account is invested and is growing.  I have my statement that shows my balance as of December 31, 2023.  Am I correct in assuming that as long as the amount I bring in above my SS benefit is below my balance as of December 31, 2023 I will have no Thai tax liability?

We don't have a definitive answer to this but my opinion is that mixed funds would be treated on a percentage basis.

 

E.g. 100K in a Bank Account that has generated 10K in Interest since 1/1/2024

Bring in 55K and 50K would be considered from your pre 1/1/24 capital & 5K would be considered interest & so taxable.

 

 

[Mike Teavee]

17 minutes ago, jayboy said:

 

Do you think school fees would fall into this category and would it be prudent to remit directly to the school?

My opinion on this is if you were paying the school fees for a child that doesn't live with you, it could be treated as a gift but if you were paying it for a child that does live with you it would fall under your normal living expenses.

 

 

[jayboy]

21 minutes ago, Mike Teavee said:

If the flight originates in Thailand then it's considered remitting money into Thailand so doesn't matter if you book Thai Airways, Emirates, KLM, Qantas etc... if the flights starts from a Thai Airport, you've brought money into Thailand to pay for it. 

 

 

Really? If I hypothetically purchased an Emirates return ticket to London originating in Bangkok with my credit card issued by a Channel Islands bank, no money would be brought into Thailand and it would not be considered as a remittance.

 

If I paid with my credit card issued by my Thai bank that might be different.

[Ben Zioner]

42 minutes ago, Mike Teavee said:

If the flight originates in Thailand then it's considered remitting money into Thailand so doesn't matter if you book Thai Airways, Emirates, KLM, Qantas etc... if the flights starts from a Thai Airport, you've brought money into Thailand to pay for it. 

 

However, if you booked a flight to a 3rd country & booked a different itinerary to then take you onwards to your home country, that flight wouldn't be remitted income even if it was on Thai Airways.

 

Book Emirates from KL to London. Pay in MYR, use your VPN if that makes you feel better.

 

Fly Airasia to KL, board your flight.

[Mike Teavee]

23 minutes ago, jayboy said:

 

Really? If I hypothetically purchased an Emirates return ticket to London originating in Bangkok with my credit card issued by a Channel Islands bank, no money would be brought into Thailand and it would not be considered as a remittance.

 

If I paid with my credit card issued by my Thai bank that might be different.

IMHO yes, because you are paying for a service that originates from within Thailand.

 

Part of the fare is the various Airport Taxes/service charges all set by Thailand, so at least this money is remitted, but IMHO the whole fare would be considered remitted.

[jayboy]

9 minutes ago, Mike Teavee said:

 

 

Part of the fare is the various Airport Taxes/service charges all set by Thailand, so at least this money is remitted, but IMHO the whole fare would be considered remitted.

 

 

Your opinion is noted though I do not agree with it.It's largely irrelevant because no sane person would declare that expense on his Thai tax return.

[jayboy]

52 minutes ago, Mike Teavee said:

My opinion on this is if you were paying the school fees for a child that doesn't live with you, it could be treated as a gift but if you were paying it for a child that does live with you it would fall under your normal living expenses.

 

 

 

Any evidence to back that opinion other than a thumb in the air?

[redwood1]

And no surprise this thread is the longest one so far....

 

 

[Lorry]

23 minutes ago, jayboy said:

 

Any evidence to back that opinion other than a thumb in the air?

What Mike Teavee describes is the viewpoint of HMRC.

Quite possibly the TRD wil follow them. 

[Mike Lister]

1 hour ago, jayboy said:

 

Do you think school fees would fall into this category and would it be prudent to remit directly to the school?

I have no idea on this, if I had to guess I'd probably say no since the school fees are necessary expense that would have to be paid anyway.  If the child was yours who lives with you, I'd say no. If the child was unrelated and lived elsewhere, it stands a better chance. Gifting your own child school fees is like gifting them living and accomodation expense when they live with you. Bottom line, I don't know.

[Mike Teavee]

35 minutes ago, jayboy said:

 

Any evidence to back that opinion other than a thumb in the air?

Gifts can be given for educational purposes, however IMHO this is targeted more to sponsoring a child's education rather than paying for your own child (again, all just my humble opinion) this would be considered normal day-2-day expenses. 

• Gifts for Educational or Public Benefit: Gifts intended for educational purposes or public benefits are often exempt, aligning with the donor’s intentions and complying with specific regulatory approvals.

Quite a detailed review of the rules around tax on "Gifts" https://www.expattaxthailand.com/gift-tax-2024/

 

[Mike Teavee]

4 hours ago, Yumthai said:

I read "gratuitously" as: donee does not give something predetermined in the gift contract back in return to the gift.

That does not mean donee cannot do what he/she wants in the future after gift is acted.

 

Besides you can read further:

 

Section 535. The following gifts are not revocable for ingratitude:

1. Gifts purely remuneratory
2. Gifts encumbered with a charge
3. Gifts made in compliance with a moral duty
4. Gifts made in consideration of marriage

 

If a gift can be remuneratory then by definition there is something in return to the gift so not gratis.

 

Again, Thai rules inconsistency or mistranslations ...

 

Might be worth a read: https://www.expattaxthailand.com/gift-tax-2024/

Caution Strongly Advised: The Implications of Using Gifts for Tax Planning

We receive many enquiries from expats looking to use gifts for tax planning. We strongly advise caution when considering this approach.

When you give something away as a gift, you are expected to relinquish all benefits from that asset. If you continue to benefit from it in any way, this is known as a ‘gift with reservation’.

For tax planning purposes, it’s crucial to understand that you must not derive any benefit when gifting assets. For example, if an expat sends money from overseas to their Thai spouse and it covers their living expenses, it is not considered a gift. Attempting to bypass the tax regulations in this way is likely to be considered tax evasion, potentially resulting in severe penalties.

A ‘gift with reservation’ can include a wide range of assets, including intangible ones like stocks and shares, valuable personal items such as jewellery or antiques, cars, or any asset subject to inheritance tax.

If you do plan to use the gifting rules in your tax planning, we strongly advise seeking professional advice and having a formal gift document drawn up and notarised by a lawyer.

 

[redwood1]

1 hour ago, Mike Teavee said:

IMHO yes, because you are paying for a service that originates from within Thailand.

 

Part of the fare is the various Airport Taxes/service charges all set by Thailand, so at least this money is remitted, but IMHO the whole fare would be considered remitted.

 

 

The IRS in the USA is a million times more organized than the Thai tax people will ever be EVER.

 

And the USA IRS almost never goes over someones taxes line by line wanting to know every tiny detail.......Your dreaming if think the Thais  would check on where the money came from to pay for all flights originating in Thailand... That just nuts....

[Mike Teavee]

3 minutes ago, redwood1 said:

 

 

The IRS in the USA is a million times more organized that the Thai tax people will ever be EVER.

 

And the USA IRS almost never goes over someones taxes line by line wanting to know every tiny detail.......Your dreaming if think the Thais  would check on where the money came from to pay for all flights originating in Thailand... That just nuts....

I never suggested they would & have actually stated several times that I won't be declaring the money I spend on flights for my annual trip to the UK, but the discussion was around whether Foreign Credit Cards used in Thailand is remitting money or not, it is not about whether you'd get caught doing it.

[Mike Lister]

5 hours ago, JimGant said:

Indeed. If I buy a BigMac, and charge it to my credit card, this is the bank's money paying for my lunch. 

You chaps across the pond have some funny ideas on such things, you think that having an intermediary make a payment for you, absolves you of any connection with that payment..........it wasn't me guv, he paid for it, not me (whistles in the air and walks away). Frank Wilson would not be impressed. 🙂

[Mike Lister]

11 minutes ago, Mike Teavee said:

I never suggested they would & have actually stated several times that I won't be declaring the money I spend on flights for my annual trip to the UK, but the discussion was around whether Foreign Credit Cards used in Thailand is remitting money or not, it is not about whether you'd get caught doing it.

This is a very important distinction in these debates that everyone should pay attention to. The issue with all these things is whether something is allowable or not. not what the chances are of getting caught when using something that is not allowable or borderline. The former discussion is OK, the latter is very much not OK.